New Republic, New Elections - A Brazilian TL

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Protest of the Diretas Já movement, which took place from 1983 to 1984

Chapter 1
Bad Start

The year of 1985 marked the end of an era, as the military regime finally came to pass. Figueiredo, the dictator at the time, had started, during his administration, to liberalize and prepare for democracy to come back. The military dictatorship, that killed hundreds and persecuted thousands, was finally ceding ground to the people, as massive protests led by prominent figures such as Lula, Ulysses Guimarães and Leonel Brizola.

Leonel Brizola (left) and Lula (center)

Lula, a syndicalist who had rapidly become a leading figure in the Brazilian Left, gained notoriety for organizing strikes and protests against the military dictatorship, especially in the ABC Region of São Paulo. He even formed his own party, the Partido dos Trabalhadores (PT, Workers’ Party in English) in February 1980, with the party becoming popular among Brazilian left-leaning intellectuals such as Florestan Fernandes and Perseu Abramo. The party was founded by a mixture of workers in the ABC Region together with leftist activists who were persecuted or threatened by the dictatorship.
The regime finally ended after the 1985 Brazilian presidential election took place. Unfortunately, the regime scored its final goal against Brazil by, using political maneuvers, defeating the proposal for the election to be of universal suffrage, with it being yet another election to be decided by Congress.

Tancredo Neves

Tancredo Neves, a firm man who always stood by democracy, was fortunately elected by Congress. Yet as if by pure bad luck, he died and the job of President went to none other than his VP, José Sarney, a man who descended from a political oligarchy and worse of all, actively collaborated with the military regime. That man would be the one who would wind up governing Brazil for five years.

José Sarney in his official presidential photo

Whilst all of this took place, Fernando Collor, who was also descended from a political family, was serving his time as Federal Deputy for the small state of Alagoas.

Fernando Collor during his time as deputy

Collor was an ambitious man, however, and set his sights much higher, but for now, his main ambition was to win the 1986 governorship race in Alagoas and from there cement his political image and ambitions, with the ultimate goal being the Presidency. Yet he knew that in Brazil, ambition alone will not give you the keys to power, you need support, especially from the economic and political elites, and that's what he did when he met Victor and Roberto Civitta on April 6, 1987.

 

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Chapter 2
Not So Fit

Victor Civita (left) and his son, Roberto Civita in 1990

Victor Civita was an important man, the founder and owner of Grupo Abril, one of the most important and prestigious publishing groups in Brazil and South America. His son Roberto Civita was owner of Revista Veja, an important current affairs magazine that had a circulation of around 800 thousand per week in 1987, making it a trendsetter for political events and beliefs in Brazil, especially amongst the urban middle-class and right-leaning intellectuals, who formed the readership of the magazine. Fernando Collor, a handsome 37-year old man at the time, had just been elected Governor of Alagoas in 1986, in a highly controversial campaign that relied solely on the success of the Plano Cruzado, a package of anti-inflation measures implemented by Sarney. The Plan was initally so successful that Sarney's party, the PMDB, elected 22 out of 23 governorships during the 1986 Elections. Yet, as time passed, the Plano Cruzado started to show its flaws, and once again inflation rose to record levels in Brazil.

Empty market during hiperinflation period

Yet that didn't matter much on April 6, 1987. On that day, Collor met with Roberto and Victor Civita. There, Collor presented himself as an anti-corruption warrior who fought against the bureaucratic and corrupt elite of Alagoas. Although they had a friendly meeting, the father-son duo did not find him impressive and decided not to publish the interview and to focus on other subjects for that weekly edition of Veja. [1]

While this happened, the Constitutional Convention was being held across Brazil. PMDB, which had won a massive victory in 1986, was the biggest party by far and so it could influence the elaboration of the Constitution. It wasn't a clean process, however. PMDB had many internal factions, such as a progressive faction and a conservative faction. The progressives allied themselves with the PDT (Brizola) and PT (Lula) to create a progressive document. The conservative side of PMDB, scared of this, formed its own alliance with the PFL and PDS (Directly and indirectly descended from the party of the military dictatorship, ARENA), creating the "Centrão" (Literally "Big Center" in English) coalition so as to avoid a left-wing constitution.

1987-1988 Constitutional Convention

The Centrão, fearful of the left winning the coming presidential election, extended Sarney's term for 5 years, with elections due to happen in 1989, hoping the economic situation of Brazil would improve by then.

The Constitution of 1988 was finally ratified on October 5, 1988, to wide criticism by conservatives for being too left-wing and by leftists for not being left-wing enough. Regardless, the clock was now ticking as the campaign for the 1989 Election was getting closer, with the main candidates being:

• Lula - Representing the Workers' Party, supported land reforms and left-wing economic approaches;
• Leonel Brizola - A developmentalist and nationalist, also had a lot in common with Lula in his political platform;
• Paulo Maluf - Conservative, due to economic support from the elite, he was forced to adopt more economic liberal policies in his platform and polish his image as a descendant of the dictatorship [2]
• Fernando Collor - Although he felt demoralized by not getting media support, his populist rhetoric along with his "handsomeness" compared with the other candidates helped him to rapidly rise in polls
• Mário Covas - A social-democrat, to the left of Maluf and Collor, but to the right of Lula and Brizola

Candidates for the 1989 Election in a TV program

The end of 1988 marked a special time in Brazilian politics, with Paulo Maluf and Fernando Collor both fighting for the mantle of who was the most economic liberal of the two, with Maluf accusing Collor of being a chamaleon who would always change his position in subjects depending on how popular they were and Collor pointing out Maluf's tenure as Governor of São Paulo, marked by the creation of new government-owned companies and developmentalist projects in the state. The media was still skeptical of Collor, seeing him as too idealistic, although they never questioned how charismatic he was. [3] It was also undeniable that even without elite support, Collor managed to market himself as the anti-corrupt candidate and the one who would "clean up Brazil". Collor's marketing campaign is still a case study in Brazilian Political Science.

1982 Veja magazine with a report on Paulo Maluf

As the year of 1989 began, the Election was becoming more and more important as a mix of elite support, populism and ample democratic participation (This was the first election in all of Brazilian history where more than 49% of the population could vote) would result in an election that would permanently shape the future of Brazil.







[1] This is the POD. IOTL right after the interview Veja published an issue that portrayed Collor as an anti-corrupt governor who fought for economic liberalism and government transparency. ITTL the interview goes differently and Veja decides not to publish the article, weakening Collor in his aspirations for a 1989 run.
[2] Many things are different than from OTL. Due to Fernando Collor not getting media support, Paulo Maluf is chosen as the candidate of the elites, in exchange for many concessions, such as more economic liberalism, more pro-democratic tendencies (Such as denouncing the dictatorship) and avoiding many of his most infamous quotes (Such as "If you have a sexual desire, it's okay: rape but don't kill". ITTL he doesn't say that).
[3] By media, I mean Grupo Abril and other close conglomerates. Some media networks would probably still support Collor regardless of whether Veja would portray him favorably. Globo ITTL is less supportive of Collor and has a pro-Maluf bias.

 

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Chapter 3
The Campaign and the First Round
As the year of 1989 passed, the campaign for the victory in the Election intensified, and the four main competitors for the Election were ramping up their efforts, especially on TV, where every candidate had the right to a free hour of public electoral propaganda.
Lula ran a campaign entirely focused on inflation, unemployment, the cost of living and how the answer to those issues was a left-wing government who would create jobs, stimulate the economy, protect the Brazilian industry, reduce the cost of living and also raise living standards by increasing the mininum wage. Lula had the endorsement of many prominent artistic figures, such as musicians, actors and directors. Not only that, a signifcant part of the intellectual class supported Lula and his program, which they saw as necessary to develop Brazil and make it a richer and better-off nation. He also had massive support from urban workers and lower-income Brazilians, alongside with young people and women.

Lula campaign poster


Also on the left, Brizola ran a big campaign, focusing on his accomplishments as Governor of Rio de Janeiro from 1983 to 1987. One of these were the Centros Integrados de Educação Pública (Integrated Centers of Public Education), which were full-time schools that operated from 8 A.M. to 5 P.M., offering many amenities and activities to pupils. The main purpose of those schools was to serve working-class children, whose parents often worked during the entire day. Alongside that, he focused on inflation, unemployment and the cost of living. His support was strongest amongst the urban middle-class, "Old Left" and the Varguist/Goulartist generation, who saw Brizola as the continuation of Getúlio Vargas and João Goulart (The President that was couped in 1964 due to his reform proposals).

Brizola 1989 campaign poster

Fernando Collor meanwhile, ran a right-wing populist campaign, also focusing on the same issues, with the addition of corruption. He claimed that the only way to truly solve all the issues that the Brazilian people faced was to implement an extensive campaign of privatizations, desregulation and free trade (suspension of tariffs). Basically a bizarre combination of populism and economic liberalism, where the "elites" in Collor's case, were the bureaucrats who supported state intervention in the economy to both keep their privileges and also to enrich themselves through corruption schemes. Because of how "handsome" he was, and also due to his obscurity - which gave him the advantage of not being associated with the government or the political class - he quickly rose in opinion polls. His support was strongest amongst lower-class Brazilians (Although the majority of this group still supported Lula or Brizola) and the "countryside" middle-class.

Collor 1989 campaign poster

Paulo Maluf meanwhile presented himself as the candidate that would fight against the hyperinflation and corruption of the Sarney era. He prioritized economic liberalism, and had many of the same policies as Collor had, with the difference being that due to his elite support, he was forced to be less "aggressive" in his behaviour and speeches, and tried to avoid populism, using it only to decry the "corrupt politicians that dominate Brasília". His strongest support was amongst the urban middle-class, right-wing intellectuals and rural landowners, who trusted that Maluf would help them keep their power.

Maluf 1989 campaign brochure

On November 15, 1989, the election took place. The entire nation was ecstatic and hopeful that their candidate could win.
More than 72 million people went to the polls (Voting was mandatory after all, although one could vote for no one or vote null).
The results were as following

Results for the first round (5 highest placed candidates only):

Candidate (Party)	Number of votes
Fernando Collor (PRN)	17.352.643
Luiz Inácio Lula da Silva (PT)	11.712.905
Leonel Brizola (PDT)	11.235.177
Paulo Maluf (PDS)	9.904.432

Mário Covas (PSDB)

6.112.635

The elite was extremely disappointed. Maluf was in 4th place, even with constant media support and funding.
Brizola was also sad that he almost made it into the runoff, but was defeated.
Both Collor and Lula immediately jumpstarted their campaign against each other, with Lula targeting undecided voters by assuring them that he wasn't as radical as the media portrayed him, pointing to his running mate, Aluísio Mercadante [1]. Collor atacked Lula by portraying him as a radical who would drive Brazil into the ground.


[1] Another major POD. ITTL the corruption scheme surrounding Bisol is revealed earlier, and he is replaced by Aloísio Mercadante as Lula's running mate in the 1989 Election

 

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Chapter 4
Runoff
The runoff was brutal, even more so than the first round. The elite, still saddened by Maluf's defeat tried to make up for the lost time by promoting Collor and his policies whilst demonizing Lula. The rhetoric used against Lula ranged from him being a syndicalist who would run the country into the ground to a communist that would take away the private property of every Brazilian and force them to share their houses with other people. Fernando Collor constantly denounced Lula, arguing that his reputation for the 1980s strikes in which he participated meant that he would be disastrous to the Brazilian economy, even suggesting that if Lula won "every single foreign investor would get out of Brazil as quickly as possible", which would - according to him - increase inflation and deteriorate living conditions even more. He also portrayed Lula as the candidate of the "bureaucrats" and of the "corrupt".

Image of debate between Lula and Collor


The dirtiest trick, however, would happen on the last debate. On December 14, a televised debate on Bandeirantes, which was also broadcast on Globo (The largest media company in Brazil), took place. To the people who watched the debate, it was clearly balanced, with both Lula and Collor presenting themselves very well. However, as the debate happened at night, a big portion of the electorate would not watch it. One day later, in the morning, an edited version of the debate would be shown. The problem, however, is that this edited version was clearly biased in favour of Collor, with it making look like Lula was weak and had bad proposals. To contemporany historians, this edited version was the last-ditch effort by the media to guarantee a Collor victory, which was their preferred outcome.
The runoff finally took place on December 17, when tens of millions of Brazilians cast their ballots. The results went as following:

Candidate(Party)	Number of votes
Luiz Inácio Lula da Silva (PT)	34.785.961
Fernando Collor (PRN)	31.380.401

Election results by state

It was settled. Lula would be the next President, having Aloizio Mercadante as his Vice-President.
The powers that be were furious, the man that they hated the most was now the President, with the only consolation they had being that Congress was anti-PT in its composition and that Lula would have a LOT of difficulty in governing the country.
Some hoped that this would result in an impeachment proceeding, with a columnist even proclaiming that "Removing Lula and Mercadante on day 1" would be the best way to avoid the "total collapse of the Brazilian economy" and to prevent "a socialist revolution" that Lula would supposedly provoke. Nonetheless, Congress wasn't as radically anti-Lula as the Right hoped, a columnist eerily said that "To govern with Congress is to buy Congress", arguing that if Lula gave enough money to Congress, some portions of his agenda could passs.
Lula's presidency would officially begin on March 15, 1990.

 

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Chapter 5
Nuclear failures
On March 15, 1990, Lula was inaugurated as President of Brazil.
One of his first actions was to extinguish the National Information Service, which was established by the military dictatorship as a surveillance agent that persecuted dissidents. Unfortunately for him however, the National Defense Council was kept, as pressure from Congress and the military weighed on him. The Council, a consultative body that cooperated with the Executive on matters related to national security was not extinguished, as Lula's 1989 platform said he would.
Lula decided that if he wanted to gain popular appeal (and have his party gain the 1990 legislative elections), his main priority would be to fight against inflation.
Thinking about that, he convened a meeting of 4 economists (All of whom were linked to PT) and together elaborated a plan, that would be presented to the general public in March 14, 1990 and put into effect on March 30, 1990. The plan, named the Mantega Plan (After the economist Guido Mantega), consisted on some of the approaches presented in the Plano Cruzado, such as price freezes, and some from the Plano Bresser [1], such as reducing importations and lowering the exchange rate, by devaluing the new currency, which was to be named Escudo. [2]
The plan worked at the start, with inflation decreasing to around 7% in April 1990.
On April 23, 1990, he was demoralized after he failed to convince Congress to suspend Angra I's operation and to cancel Angra II's project. Those two nuclear usines were heavily criticized by Lula and his supporters for damaging the environment of Angra dos Reis, in Rio de Janeiro.

Image of Angra I



On April 27, 1990, his government introduced a bill that would triple the minimum wage in Brazil, under the justification that it "is instrumental in increasing living standards for the poorest Brazilians". The bill was quickly defeated in both chambers of Congress. Nelson Carneiro, President of the Senate, famously justified the defeat of the bill by saying "It's like pouring gasoline in a fire, you will only make it burn harder", explaining that raising the minimum wage during that period would make inflation surge up again.
The problems for Lula would only get worse in May 1990.

Inflation in Brazil from January to May 1990

On that month, inflation rose to a record 39%, with food prices increasing much more. The Plano Mantega, despite it's good intentions, proved to be unsustainable on the long-run. Lula's popularity plummeted. If around 57% of Brazilians approved of his government in March 1990, only 15% did so by the end of May. Collor commented on this issue: "As warned, the new President has driven our country into the ground, Congress must put a stop to him and his cruel plans". The right-wing press was at the same time extremely worried about the situation but also slightly satisfied that its predictions about a Lula administration were being proven right.
Lula was privately in panic, he knew that if nothing was done, he would most likely be impeached and he was sure that his already-small coalition in Congress would be reduced even further in the upcoming legislative elections. He immediately tried to start another anti-inflation package, but was cautioned not to do so by his advisors. The Vice-Presidente Mercadante also felt that it would be unwise to start another plan so quickly and in such a short time span.
Being beaten on all sides and not being allowed to deal with inflation, Lula decided that his time would be better spent focusing on another issue that was important to him: Land reform.

MST (Landless Workers' Movement) occupying a latifúndio in 1985


For years, Lula was a prominent supporter of land reform, favoring breaking up latifúndios (Big properties that were mostly inherited from generation to generation) and distributing land to promote family agriculture and increase industrialization by breaking the power of the rural elites who held a disproportionate amount of influence in Brazilian political and economic life.
He decided that the best course of action to divert attention away from inflation and toward land reform. To that end, he would introduce a bill.

[1] Both plans promoted by Sarney to solve the hyperinflation issue
[2] I know NOTHING about economics, so I'm basing all of this on OTL measures

 

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Chapter 6
Deal with the Devil

Debate in the Chamber of Deputies

The Land Reform Law was introduced on May 28, 1990. It was a truly "radical" bill (At least for the Center and Right-wing). The bill proposed a cap on the size of rural properties. Properties that exceded these values would have their size reduced. The expropriated lands would be given to registered and eligible people in a "Land Reform Waiting List". A special ministry would be created that would have oversight of the whole process, to avoid corruption and patronage.
On June 5, 1990, the bill was put up to a vote. It was soundly defeated ina 363-224 margin in the Chamber of Deputies. Lula was shocked by the result, as over the past week he had spent hours meeting with influential figures in Congress so as to guarantee the passage of the bill.

Lula after the defeat of the bill

Two days later, he also received worrying revelations that deputies and senators were already preparing to give start to impeachment proceedings against Lula, on grounds of "undue intervention in State and Municipal affairs" because of his land reform project. The true reason was obvious: Lula's approval ratings were abysmal and Congress wanted to remove him so as to prevent popular discontent from also reaching them.
The President was panicked, an impeachment process could start at any moment and he had no idea of what he could do to avoid it.
Then Leônidas Pires Gonçalves appeared.

Leônidas Pires Gonçalves in 1987

Leônidas was a man of many faces. On one hand, he had a democratic streak, oppenly defying fellow men of rank by preventing a coup against José Sarney in 1985 (Some people in the military wanted to hand over the Presidency to Ulysses Guimarães - who was then President of the Chamber of Deputies - following Tancredo Neves' death). On the other, he only started to openly denounce the military dictatorship in the early 1980s, when the regime was democratizing and falling apart. Regardless, due to his democratic credentials he was appointed the Minister of the Army during the government of José Sarney.
After the government ended on March of 1990, he left to RIo de Janeiro whilst Lula appointed a political sympathizer to the job.
Yet Leônidas never quite gave up on politics (and especially on the military). When reports of Lula's likely impeachment started surfacing, the President received a call from Leônidas. In what has been (somewhat hyperbolically) dubbed as "the most important telephone call in South American history", Leônidas mapped a plan to help Lula avoid impeachment, implement some of his policies whilst also pleasing the Brazilian military (that deeply hated him) and avoiding a coup. Lula carefully listened.
The plan consisted of using the defense sector companies Engesa and Bernardini to sell tanks and other military materials to a brand new market: The neighboring country of Venezuela. The country, although plagued by some unrest (Such as the Caracazo) still had some positive developments. The policies of the Carlos Andrés Pérez government (Privatizations and other economic reforms) were said to be indicators of potential future growth.

Carlos Andrés Pérez as President of Venezuela

Not only that, the Venezuelan military wanted more weapons and armored fighting vehicles (To both strenghten itself but also to be able to more effectively suppress public discontent and instability).
With the money to be gained by selling those weapons to Venezuela, the Lula government would have enough to give an "additional salary" to Congress as long as it voted in favor of him and his policies.
Lula accepted this. It was an act of pure desperation, however.
The selling of weapons began immediately, with the first batch being sold one week later.
Making use of the fact that the Brazilian Military was also profiting from selling weapons, Lula was able to convince them to accept the PEC Militar, that codified that defense and other national security-related issues should be put into the hands of non-military. This effectively made the Armed Forces be put under the control of civilians. To safeguard the "Venezuela Scheme", the Lula administration put the so-called "Green Venezuelans" (Non-military Brazilians who nonetheless benefited from the Scheme, such as people related to defense contractors and investors) in control of the (newly established) Ministry of Defense and all other national security apparatus.
The scheme was safe and sound, and millions would be made from it, while Lula managed to avoid impeachment and pass his policies by giving money to Congress.

 

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Chapter 7
Of Cups and Companies

Logo of Engesa, one of the companies turned mixed-capital ventures by Lula

To solidify his control over the venture, on June 10, 1990, Lula bought a 75% stake of Engesa and Bernardini, with the intention of turning them into mixed-capital companies, giving his government more control over the Venezuelan Scheme. The owners of both companies quietly accepted state dominance over their business, after all, they were just as involved in that plot as Lula was.
This (almost) complete control over the Scheme was very benefitial to Lula and the military, they would both make millions by selling weapons to the Venezuelan Army, giving the two more resources to pursue their own goals.
When the first check arrived, on June 12, all the participants were ecstatic. The purchase was a much needed boost for Lula. Of the 9 million dollars received on the first military purchase, 4 million were given to Lula, 3 million to the Brazilian Armed Forces and the people involved in it and 2 million to other conspirators (Including Leônidas Gonçalves himself).
Of the 4 million that Lula received, he divided it between 2 million to bribe the most high-ranking officials so as to at least delay the impeachment proceedings, and other 2 million were spent in a rather... odd way.

Logo of the 1990 FIFA World Cup


The World Cup of 1990 was taking place at that moment, and as with everything related to the FIFA World Cups, Brazilians were paying a lot of attention to it. Brazil easily beat out its competitors at the group phases. Lula who wanted to increase national pride, covertly invested 2 million dollars in the Brazilian team, with a focus on the June 24 match between Argentina and Brazil.

Image of the match between Argentina and Brazil in 1990

Receiving 2 million dollars of secret funding, the team (who was also promised 10 million dollars by the government if they won the Cup) played hard and managed to defeat Argentina 2 X 1 in a historic game, with Müller and Careca scoring one goal each.
The celebrations continued as Brazil defeated Yugoslavia on June 30 in a 1 X 0 match, but unfortunately the country was defeated by Italy on July 3, in a 2 X 1 match.
It's a common joke that Lula was trying to give Brazil another World Cup, but keeping in mind the severe inflation, economic and political crises that Brazil was going through, it was necessary - at least for some - that Brazil kept its national pride intact, and what better way to do this than use the most popular sport in Brazil by far?

 

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Chapter 8
Bills and Accomplishments
On August 2, 1990, one day after Congress resumed its activities, Lula introduced two important bills that were part of his 1989 program. Hoping to revive his sinking popularity, Lula tried to highlight those bills days prior to their introduction.
The first bill, the "Cuidados Universais" (Universal Care) Law, would establish and fund the construction of public laundromats, kindergartens and popular restaurants, guaranteeing that at least 0.5% of the budget would be spent to fund the provisions in the bill.
The second, the "Justiça igualitária" (Egalitarian Justice) Law, would mandate judicial gratuity for citizens who had a monthly income lower than the minimum wage. This would guarantee that those citizens would have access to the justice system without having to pay absurdly high prices for it.
Two weeks later, the verdict was given by the vote.
It was an astounding victory, with over 300 deputies and over 60 senators voting for both laws.

Infoboxes on both laws.

Those two bills had historic effects in Brazil. The construction of public facilities decreased unemployment (Although it had a short-term negative impact on inflation, increasing it even more to a whopping 60% in September 1990) and helped women - especially working-class women - who often did not have enough money to afford their own washing machine, or who couldn't help their child attend kindergarten because the waiting list was so big.
All in all, those two bills helped to decrease inequality and increase living standards in Brazil, even after being constantly attacked by conservatives and economic liberals.
Symbolically, it also meant the success of the Venezuelan Scheme. Lula paid most of the deputies and senators to vote in favor of both bills.

 

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Chapter 9
Bills and Elections

Plínio de Arruda Sampaio in 1990


After the approval of those bills, Plínio de Arruda Sampaio, a 60-year old deputy who had been a member of PT ever since its founding in 1980, decided that he would run to the Senate instead of running for the Government of São Paulo[1]. The reason for that was due to his focus on making sure that Lula's government succeeded and was able to accomplish more.

Back to Lula's cabinet, it was decided that a new inflation plan would be done. Named the "Plano Ipê" (Named after the ipê-amarelo, the national tree of Brazil, whose name in English is yellow lapacho). The new inflation control program was presented on August 18, 1990 and would be implemented on August 30, 1990. It consisted basically of price controls, replacement of the currency by the ipê, indexation of taxes and high taxes on financial transactions. Lula trusted that the plan would work on reducing inflation and gave a speech detailing the benefits of the plan.

With inflation supposedly under control and a rising popularity rate, the President decided to once again continue to implement some of his reforms.
This time, he would raise the IPTU (A tax on urban properties) and make use of progressive taxation. The plan would consist of, by using census data, verify what were the wealthiest regions of each major city in Brazil, and increase taxes on properties located in the wealthiest regions (Especially those closer to the city center and with more access to public amenities). The project was presented on September 17, 1990, and would be voted on September 26, 1990. Making use of Venezuelan Scheme, a slight majority (Over 50% of each chamber) approved it. This also represented a major change in Brazilian history.
This helped to reduce urban inequality, as the extra tax money was spent on improving public services on poorer and more distant neighborhoods. Considered a victory for poorer Brazilians, the bill would remain in force up to the modern day, and even the most right-wing candidates have no appetite for ending it.

On October 3, 1990, the 1990 legislative elections finally happened. Lula hoped that with inflation seemingly under control his party would be able to achieve a major political victory, reducing the need for the continuation of the Venezuelan Scheme.
The reduction of inflation, that had continued for about one month now, was seen by many as a signal that maybe this WAS the inflation program that finally worked.
The MDB, who was split between those who vehemently denounced Lula and those who supported him, were unable to deal with this identity crisis.

The results for the elections were:

[2]



Lula was overjoyed with how successful his party was. Although PT still was a minority party, Lula could bargain with Congress much more effectively and put more pressure on it.
Plínio de Arruda Sampaio himself was elected Senator from São Paulo with a margin of over 300 thousand votes over his closest opponent. According to a Veja article published two days after the results of the election, "Brazil has now entered the time of the Left, where left-wing candidates dominate not only the Executive, but also the Legislative. It remains to be seen how damaging this shift will be to the economic situation of the nation".
Although inaccurate (Left-wing parties were still a minority in Congress), this article does show how the economic elite felt about the results of the 1990 legislative election. Having a larger base and with Venezuelan cash flowing more than ever, Lula felt like he had free rein to pass his projects.


[1] Another major POD: IOTL he ran for Governor of São Paulo in 1990 but ended up being defeated and did not even make it into the runoff
[2] The extra four Senate seats that PT wins in this timeline are, in alphabetical order: Amapá, Distrito Federal, Minas Gerais and Pará.
The other four seats that PDT wins ITTL are: Acre, Mato Grosso do Sul, Pernambuco and Tocantins.

 

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Chapter 10
Things Go South (But Also West)

On November 1990, the crash began. Inflation rapidly rose once again.
It seemed like, regardless of how many plans were done, inflation would always strike back. Lula's plan for combating inflation once again failed.
Inflation reached 47% in the end of November, and Lula's popularity once again fell.
The elite media once again took this as an opportunity to attack Lula.
Many voters felt that they had been betrayed by the PT, that had given them a false hope that inflation was under control.

Inflation from September to November 1990

Lula was also worried about this failure, and after being once again told by his VP that doing another inflation plan would be unwise, he was given the opportunity to, according to Mercadante, "focus on something new".

1990 MST Congress in which Lula participated


On November 22, 1990, Lula went to a MST conference that had been organized in support of him. There, he proposed that the landless give to Lula some of the demands that they had besides land reform. While classics such as "better education" and "healthcare" were the top demands, one of them caught Lula's attention.
"Make transporting produce easier".
This single demand would result in a year-long plan that would improve Brazilian transportation and increase the development of the Center-West, North and Northeast regions.
The "Railway Development Plan" was unveiled to the public on December 9, 1990, after a week-long discussion with many leading people on the sector of railway transportation, a sector that had been in decline for decades and was desperately wanting revitalization.
It focused on increasing the number of railways, along with improving on the quality of the existing ones. Lula was aware that railways could provide an alternative to highways for transporting materials, especially small farmers who would rather use a railway than to pay high prices to buy a car.

The Center-West and Northeast regions would be the regions where 60% of new railways would be built. The remaining 40% would be split between the Litoral Northeast (Sergipe, Pernambuco, Paraíba, Rio Grande do Norte and Alagoas), the South (Especially the Pampas of Rio Grande do Sul, linking it with Porto Alegre and other major cities) and the Amapá state, which came about because of intense lobbying by the recently elected PT senator from the state.
Minas Gerais would also prove essential to this project, as a big portion of Brazilian railways were located in the region.
The Plan managed to get support from the majority of the political parties (Even without the Venezuelan money). It would be developed and applied from November 1990 to November 1991.
Some of the funds used for this came from the Government and the budget itself, but a signifcant part (35%, according to a 2006 estimate) came from the Venezuelan Scheme, that was becoming more and more essential for both Lula and the Brazilian Military.

Map detailing where the new railways would be built, along with their target costumer base

 

[Taunay]

Chapter 11
Nuclear Deals

One of the main platforms in Lula's 1989 program consisted of his opposition to nuclear energy and the Brazilian nuclear program. While he failed in getting rid of the first, he proved far more successful in the latter.
The Brazilian nuclear program was slowly developing by the end of the dictatorship. After 1985, however, it had fallen into a spiral of decline and crisis. Its main flagship, the Centro Experimental Aramar, in the city of Iperó (State of São Paulo), was facing this crisis.

Modern-day image of the Centro Experimental Aramar, in the state of São Paulo


When, on January 2, 1991, Lula announced that a deal between Argentina and Brazil on nuclear matters would be negotiated, expectations were high that both coutries' programs would finally be put down. Six days later, this would come true, as Lula and Carlos Menem would announce the dismantling of the nuclear programs of both countries in the "Londrina Declaration".
To that end, the Brazilian-Argentine Nuclear Regulatory Committee would be established, with headquarters in Rio de Janeiro and Buenos Aires.
To the surprise of many, the Brazilian Armed Forces didn't negatively react to those news, expressing a certain neutrality on the subject. In the future, it would be revealed that this was due to the fact that the Armed Forces were satisfied enough with being supplied Venezuelan money and being able to fabricate more equipment through the (by now) state-owned Engesa and Bernardini companies. [1]

It was no surprise to many that the nuclear program would be dismantled, as the Brazilian left had been opposed to it from the start, with Lula privately seeing it as a "military toy program".
With that out of the way, Lula and his allies looked forward to February 1, 1991, when the next Congress would convene.

[1] By this point, Engesa and Bernardini were bought by the Government in a deal by which the owners and some stake-holders would receive around ~15 to ~20% of the profits from the Venezuelan Scheme
--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
This chapter wasn't actually planned (Which explains why it's short). I made it due to @Belka DNW 's insightful observations on how the government would handle the Brazilian nuclear program. I originally thought about somehow having the country keeping it, but I realized that public opinion and both the mainstream Right and Left were opposed to the program, also Lula didn't like it in 1989.

 

[Taunay]

Chapter 12
Ups and More Ups

When the new Congress started its new meeting on February 4, 1991, Lula and his team put up a proposal that touched on something Lula was passionate about: Land reform.
With his land reform bill being one of his worst political defeats in the past year, the President felt that he could be able to pass a new law related to this topic.
To that end, the Law Concerning Rural Properties was introduced on February 7, 1991. The Law was revolutionary, in that it at the same time helped land reform whilst ensuring justice and fairness in the rural areas of Brazil.
A Lula staffer helpfully summed up all the aspects of the law in a letter to a newspaper editor:
"- Anyone who engages in slavery on his rural property shall have the property confiscated and taken under control by the Government, who will auction it following the conditions below;
- Latifúndios [Big rural properties that were almost dynastically owned and sometimes were improductive] would be finally defined using technical, mathematical and historical criteria;
- The latifúndios as defined will have increased taxation on them, especially if those are unproductive and produce no food or generate any other economic activity other than land speculation;
- When a latifúndio is sold, the Government must break it up so that it is no longer a latifúndio, with the buyer receiving the parts of the latifúndio equivalent to how much they paid for it."
Those were big proposals and generated outrage amongst the rural elite, who were worried about having their land confiscated and the tax increases.
The industrial elite, on the other hand, were neutral or even supportive of the law, as it would weaken their rural competitors and incentivize the government to shift its focus to industry instead of big-scale agriculture.
Lula even suffered death threats due to the Law, showing how controversial it was.
This single bill took tens of millions of dollars from the Venezuelan Scheme to get passed, as many of the people who would vote on it were themselves owners of big rural properties.
To his advantage, Lula's party did have a much bigger number of seats in Congress than ever before, and mixing his party with the other left-wing parties and more moderate Congressmen, Lula had an ample coalition from whom he could expect a favorable vote. Yet, in an extremely close margin, the bill was approved by the Chamber of Deputies on February 20 and the Senate on February 22.

(Sorry for the watermark) Infobox on the Rural Properties Law
A major victory for Lula, this bill would have big impacts on rural areas and especially in the Center-West region and the São Paulo countryside, with both regions receiving more settlement from the landless as more land was given.
Lula wasn't satisfied with only that, however. Using his connections in Congress, he helped to government agency to investigate the usage of pesticides in food production, with the intention of reducing what he called "excessive" use. This agency would oversee dozens of major companies and sue some of them in the following decades for using prohibited pesticides or having negligent safety protocols for their workers.
Even with all of that, Lula still couldn't deal with the number 1 issue of his government: Inflation. It was still rising, and this was evident by the President's low approval ratings, in the 30s to 40s during the month of February. Mercadante, in his role as vice-president, was behind the scenes in contact with many prominent economists and intellectuals from Brazil and South America, and their main discussion was how could a solution to the inflation problem could be thought of.
They came up with the "Comission" idea, in which a body of economists from all political leanings would, under the supervision of the President, think about and analyze the inflation problem. Mercadante presented this to Lula, but said that it would probably take at least 8 months for the Comission to present this project.
Lula refused, however, saying that 8 months was too long of a time to solve such a pressing issue as inflation. As he would write in his memoirs:

"Mercadante, whilst being a good vice-president, always seemed a bit out of touch for me. He was too "technical" in a way. The Comission idea was interesting, but the timeframe at that moment [FEBRUARY 1991] meant that the inflation issue was too urgent to simply be put up to an analysis that would last more than half of a year."

- Lula: An Autobiography. Written by Luiz Inácio Lula da Silva and published in 1999. Rio de Janeiro [1]

[1] I'm interested in now using (fictional) books written by the characters of TTL, so as to give more immersion and give hints on the future

 

[Taunay]

Chapter 13
Eternal Debt

One of the main drivers of inflation - at least in Lula's mind - was the Brazilian external debt. A legacy of the military dictatorship [1], this debt was estimated at 115 billion dollars in 1989.

Foreign debt up to 1990

On Lula's 1989 platform, he spoke out against paying it, as he argued that due to the fact that Brazil was no longer a military dictatorship (The regime most responsible for the debt's growth) it should not be obligated to pay it. Even though this was an issue that rallied up his core constituency and won him support from left-wing intellectuals, he decided not to take any action on the issue for the first year of his presidency.
By 1990, the debt had risen to 125 billion dollars. With the election of a more favorable Congress in that year and the passage of his "mini land reform" law, Lula felt that he could tackle inflation by addressing the debt. On March 4, 1991, a proposal was given, by Lula, to PT militants in the party's headquarters to "fight external debt". An intense discussion took place by the "Moderates" who wanted a renegotiation of the debt, and the "Exalted", who wanted to default on it. The Moderates' argument was that renegotiating would guarantee that Brazil would have access to further credit and that it would give economic (and political) stability to the country. The Exalted, on the other hand, argued that due to the fact that external debt "practically" came into existence during the military regime, the burden on paying it should not be imposed on a democratic government that came into existence from direct opposition to it. The factions were respectively supported by Mercadante and Lula.

Lula during a 1991 interview

In a close victory, the Exalted faction prevailed over the Moderates and the "defaulting" legislation was given to Lula two days later.
On March 7, 1991, the "External Debt Resolution Law" was presented to Congress. It was an extremely controversial law, even among left-wing politicians. It proposed that Brazil would default on its external debt. The main problem was that the bill didn't give any details of what to do afterwards, neither did it address the concerns from bondholders and the public for what would be the consequences from this.
In a shock to Lula (and the most radical factions of the left), the bill was defeated by a margin of over 80 votes in the Chamber of Deputies four days after it was presented.
Even the Venezuelan Scoheme wasn't enough to save the bill. Due to that, Lula never again took any action about external debt during his Presidency.
Focusing again on the rural areas of the nation, a concern presented by Lula's 1989 platform was brought up: Mass sterilization.
Congressional hearings on the subject were approved and started on March 19. Investigations were promoted and, according to a Brazilian analyst:

"By the end of April 1991, the Commission would find that hundreds of thousands of women in rural regions were coerced into sterilization by their employers, often because of how they saw sterile women as less likely to reduce their profit margins due to the fact that they can't get pregnant. The cases involved everything from threats of women being fired if they refused to sterilize to women being forced into an abortion if they got pregnant. What made all of it worse was that around 60% of the interviewed women were not aware that sterilization was an irreversible procedure. [...] The outrage caused by the Commission's findings would result in the passing of a law called the "Reproductive Integrity Law", which put harsh penalties on any companies or individuals who were found to coerce their female and/or male employees into sterlization."

- Sterile By Force: How The Rural Elites Stole A Generation. Written by Délcio da Fonseca Sobrinho and published in 1994. Porto Alegre

Infobox on the Reproductive Integrity Law

A week after the Commission was established, Lula would travel to the city of Assunção, in Paraguay, to sign the Treaty named after the city, that would establish the Southern Common Market (MERCOSUL in Portuguese). This was part of Lula's efforts aiming at regional integration between Brazil and South America, which he thought was essential to guaranteeing Brazilian soft power and sovereignty.

MERCOSUL flag

 

[Taunay]

Chapter 14

On April 3, 1991, an article appeared at the Estado de São Paulo newspaper. It detailed how, supposedly, the Lula administration was secretly selling weapons to Venezuela and using the money gained from it to approve Lula's projects in a vote-buying scheme. The anonymous source [1] which had contacted the newspaper, gave them an audio recording and many documents detailing how the scheme operated.

Estado de São Paulo

The news rapidly spread through the nation, and by April 4, the largest TV network in Brazil, TV Globo was reporting on the case. In more articles, the anonymous source also revealed that parts of the money had been used by Lula to improve Brazilian performance in the 1990 FIFA World Cup.
Lula tried to calm tensions by holding a press conference, but it had the opposite effect after a journalist asked the President why the Government had increased its shares in the Engesa and Bernardini companies, which happened to produce military-related items. Prominent politicians called on Lula to resign, including allies from Government-aligned parties.
Most of all, the Right was ecstatic at the whole crisis. Not only was the Government facing inflation, but it was also facing a legitimacy crisis after it was revealed that many of Lula's "achievements" were due to corrupt schemes.
Fernando Collor, who had been defeated in the 1989 Election and was now a Federal deputy representing his state of Alagoas, called Lula a "disgrace" and stated that an impeachment proceeding should be opened against him as soon as possible.
The allegations became more serious after some members of the Defense Ministry and the Armed Forces admitted their role in the scheme, giving more validity to the theory that not only was the Scheme real, but that it had been a massive coordination campaign between the Ministry, the Executive and the Armed Forces, with the intention of selling the weapons to Venezuela.
Not everyone believed in Lula's involvement in the scheme, however. Some PT politicians accused the media of trying to link Lula with the scandal in order to incriminate him and remove him from office.
Some, like Plínio de Arruda held a more nuanced position. He was against Lula due to the scheme and fully believed that the President was deeply involved in it. However, he argued that because the majority of the money made from that went to the Congressmen in order to buy their votes, it would be extremely hypocritical for the same corrupt Congress to impeach him. Yet, despite believing in Lula's culpability, he remained in the PT, coming to the conclusion that Lula should get a fair trial.

Ricardo Teixeira, President of the Brazilian Football Confederation
The president of the Brazilian Football Confederation, who was also implicated in the scheme due to its involvement in the 1990 FIFA World Cup, denied that he was aware of it and argued that the money was "just some investment the Government made, nothing else". This wasn't enough and he ended up being removed from the Presidency.
Liberal institutes used the event as an opportunity to rail against "State intervention in the economy". arguing that the increased presence of the State on the Engesa and Bernardini companies were the main reason the scheme took place at all.


[1] It was later revealed to be a worker at Engesa who participated in the scheme, in the 1998 book "The Venezuelan Scheme: A Brief Overview"

 

[Taunay]

Chapter 15

On April 27, 1991, Leonel Brizola, himself a candidate for President in the 1989 Election and a member of Congress, declared his support for Lula and issued an "emergency declaration". Read aloud by him in Porto Alegre the next day, it called on massive protests "from the workers of Brazil and those who stand by democracy" to stop the "legislative coup that is being done by Luís Magalhães [President of the Chamber of Deputies], violating the choice that the Brazilian people made two years ago".

Leonel Brizola

On Labour Day, approximately 2 to 5 million people participated in protests against the impeachment of Lula. Salvador, Porto Alegre, Curitiba, São Paulo, Rio de Janeiro and Recife were just some of the cities where massive protests took place. The objective was to pressure Congress not to move forward with the impeachment proceedings.

Modern-day image of the Avenida Paulista, where massive pro-Lula protests took place in 1991

This wasn't enough to stop it, unfortunately. On May 6, 1991, Luís Eduardo Magalhães, President of the Chamber of Deputies, accepted one of the many impeachment proceedings that had been opened against Lula since the allegations about the sale of weapons to Venezuela were revealed. Right after this, a special commission was formed to analyze it. In 10 grueling hearings that took place between May 8 and May 21 and an extra five between May 22 and 28, it was finally decided that the process would begin.
Literally one day after, the Chamber of Deputies voted in a 336-167 split for the impeachment to be recommended to the Senate.

Luís Eduardo Magalhães, President of the Chamber of Deputies

Note that even whilst all of this was happening, Lula was trying to buy votes to prevent himself from being impeached. This strategy failed spectacularly, as on June 10, 1991, the Senate voted 55-26 to impeach Lula. He was removed from office for 180 days, as he was now a defendant on trial. Aloizio Mercadante had just become the President of Brazil.

"When one reads about the impeachment proceeding, he quickly realizes something: the process was very quick, much more than you would expect from how it would play out, in the span of months. Yet this wasn't the case for Lula's impeachment. Why? It was simple. His impeachment was not just some Congressmen being angry at Lula for his participation in the Venezuelan Scheme, it was something much deeper. As revealed by 1998 leaks, Congress had already debating the possibility of Lula being impeached as early as February of 1990. As one Congressman from the time stated: "If Lula is not stopped, his reforms will lead to the complete collapse of a stable government and of the economic system in which it functions". Some think-tanks, such as the Instituto Liberal, were constantly contacting members of Congress in anger over laws such as the Universal Care Law, calling them "extreme State interference on the economy and the markets". The two fatal blows to Lula were the Law Concerning Rural Properties and the Reproductive Integrity Law, that were seen by the agrobusiness elite as a direct attack on them. Newspapers in rural areas would often have articles warning that Lula's measures would lead to starvation and to the total collapse of the countryside. The Law Concerning Rural Properties was even more serious, as many Congressmen themselves owned latifúndios, and even those that were bought out by the Venezuelan money, still planned behind the scenes the correct moment to impeach Lula and repeal the law.
That's why his impeachment was so fast. Congress, in conjunction with the rural elite and some sectors of the middle-class (who were worried about government spending generating inflation) tried to remove Lula at the first morally justifiable moment. They tried to do the same back in 1990, after the failure of Lula's land reform bill, but were stopped by the Venezuelan Scheme. Once it became clear however, that with a bigger Congressional coalition Lula would have the chance to finally achieve some of his goals, there was no reason for the politicians to be cautious about their actions, and the Venezuelan Scheme proved to be the perfect scapegoat to the issue."

- Order and Progress? The Last 25 Years of Brazilian Democracy in Review. Written by Jessé Souza and published in 2010. Rio de Janeiro.

On June 25, 1991, after the proceedings and commissions were finished, the fate of Lula was put up to a vote in the Senate. In an extremely close margin of 54-31, Lula was formally impeached and removed from office. He was also declared ineligible for 8 years.
After all of that, the Venezuelan Government, under the Presidency of Carlos Andrés Pérez, denied any involvement in the Scheme and affirmed its "compromise with transparency".
Plínio de Arruda Sampaio, now sure that Lula was guilty (Having even voted for his impeachment), left the PT and temporarily moved into the PDT, a fellow left-wing party that was a bit more critical of Lula.
Despite the impeachment, the Venezuelan Scheme continued, this time under even more secrecy, with the Army (Overseen by a Ministry of Defense stacked with participants in the scheme) and the companies Engesa and Bernardini operating the sales of weapons to the Venezuelan Government. This phase of the scheme, known only as the "Underground Scheme" would last for many months and would supply Venezuela with even more Brazilian weapons.

 

[Taunay]

Chapter 16

Aloizio Mercadante

Aloizio Mercadante, officially inaugurated as President on June 25 (Although he had been the Acting President during the impeachment proceedings), took as a priority to fight some of the issues that plagued Brazil during the time. In an official government broadcast, Mercadante announced that his government would "do everything it can to combat inflation, hunger, misery and corruption".

Hunger in Brazil showed a slight decline to 1991, but it was still high

On June 30, 1991, the first major measure of the Government was implemented: A broad program dedicated to fighting hunger.
The "Hunger Combat Law", as it was called, provided a measure of policies to fight hunger. It funded the construction of more restaurants for low-income people (Offering very cheap or even free food), promoting school lunch for public schools and a policy of "food assistance", in which families that could prove that they were in a state of food insecurity would receive a monthly payment of around 30 dollars in Brazilian currency, that would be always adjusted for inflation.

"Recent studies show that the policies implenented by President Aloizio Mercadante, such as the Hunger Combat Law, had a major impact in the reduction of hunger and food insecurity in Brazil, with an estimated 40% decline of the population in acute food insecurity between the years of 1991 and 1997. Those policies were kept by the following government due to the recognition of how positive they were."

- Measures Combating Hunger in Brazil in the 1990s And Their Impacts on Food Security. Written by a student at USP and published in 2003

Infobox on the Hunger Combat Law

Under Mercadante's orders, back during the start of the impeachment process, the Military was tasked with a report on the impact that the Venezuelan Scheme had on the Military apparatus. Another investigation was made on the Scheme's impact on the Engesa and Bernardini companies, which were under public pressure to have all of their government-owned shares removed.
The Military Report on the Impacts of the Venezuelan Incident on the Armed Forces, and the Special Report on the Impacts of the Venezuelan Incident on the Engesa and Bernardini companies were released under a single document (The Consequences Analysis, as it was called) on July 11, 1991. It argued that the Venezuelan Scheme had a positive impact on the Armed Forces' economic situation and that it resulted in a better focus on improvements and logistics. When it came to Bernardini/Engesa, it further argued:

"The Venezuelan scheme singlehandedly revitalized Engesa and Bernardini. The influx of money reversed the decline in revenue and profitability that both companies had been facing ever since the process of redemocratization. The extra money gained, according to a budget analysis, would be able to keep Engesa and Bernardin running for an extra decade even if the Government stopped all state investments in those companies."

- Joint Report of the Impact of the Venezuelan Scheme on the Armed Forces and Defense Companies Involved in It. Published in 1991 by the Ministry of Defense. Brasília

Following the report's release, Mercadante sided with the Military and kept the government shares on the two companies. Unbeknownst to him, the Scheme continued under secrecy...
Another major measure of Mercadante's July agenda - While Congress was off during half of the month - was travelling throughout Brazil to get the average citizen to learn more about him. After all, to the majority of Brazilians, he was seen as nothing but "Lula's running mate" and Mercadante knew that he had to instill confidence in the public, especially the left-wing, which was saddened by Lula's impeachment and his prohibition of running for elected office for 8 years. He presented himself as a successor to Lula's ideals and that he would actively fight for the poorest and against misery. Everywhere he went, he would give a speech in which he touted how the Hunger Combat Law was his idea and how it was already positively impacting struggling families. He also made a quick trip to Caracas, where he talked to Venezuelan President Carlos Andrés Pérez.
Although there are very little records of what came from this meeting, staffers from both argued that it was a calm and that they discussed trade relations. The majority of journalists and analysts were skeptical of this. It was said that the two discussed the Venezuelan Scheme, especially after the Venezuelan Press Secretary said "The Presidents discussed matters related to the military, especially pur-" before realizing that he was saying something wrong. The question was also on how the meeting went, some would describe it as probably being tense due to Mercadante's belief that Venezuela was also at fault for participating and funding the scheme in the first place, while others would say that it was actually calm and both Presidents came to an understanding that both countries had made mistakes.
By the end of July, a bigger portion of Brazilians knew who Mercadante was, and the majority of those who did had a positive opinion of him.
"It seems like the Presidency is having a good start.", said a staffer to Mercadante according to a 1995 book.

 

[Taunay]

Chapter 17

When Congress came back from recess, on August 1, 1991, the government started negotiating more packages and bills. One of these was the "Hunger Combat Extension Law". It expanded the number of people covered by the original Hunger Combat Law to over 80 million Brazilians, as it fought against all types of food insecurity and gave expanded benefits to help combat hunger more thoroughly. It passed the Chamber of Deputies on August 29, and the Senate four days later.

Infobox on the law

Another important subject was the continuation of land reform, which continued through the impeachment, but now was threatened by Congress, which was considering repealing the law. To prevent this, Mercadante created an agency under full control by the President to circumvent the threat and continue on with land reform.
Entering the month of September, an event would shake South America: The Attempted assassination of Carlos Andrés Pérez.
On September 15, 1991, after watching a presentation at the Teresa Carreño Theater, in Caracas, he was shot in the stomach by an assailant affiliated with the Revolutionary Bolivarian Movement-200.

Infobox on the assassination attempt

The whole nation stopped, all South American head of states condemned the attack. While Carlos didn't die, he was gravely injured, and it took two weeks for him to recover. The investigations had found that although the attacker was a member of the Revolutionary Bolivarian Movement-200, an underground movement that promoted the ideology of Bolivarianism, it seemed that the organization itself had not ordered the attack.
For Carlos, this didn't really matter. In his mind, the movement wanted him dead and to stop that, he would use any necessary methods to suppress it. On September 30, he announced that a special task-force would be created to supervise and, in his own words, "neutralize" any members of "all guerrilla and terrorist organizations present in Venezuelan soil". By the end of October, around 300 people had been killed by military forces, the majority of whom were not affiliated to any organization. The reason for that is because the Military saw Pérez's declaration as a greenlight for the killings of criminals and any other "undesirable elements", as stated by a Venezuelan colonel. Social services, already in a precarious situation, were cut even further, as a bigger chunk of the money was diverted to the military and security apparatus.
This, combined with the unpopular economic liberal agenda, made Carlos an unpopular president, and his popularity rating - boosted by sympathy after his assassination attempt - started to fall.
To make matters worse, a mass surveillance program was started by the Venezuelan Government following the assassination attempt, and it was quickly spreading, first through major urban areas like Caracas and Maracaibo, then through other big cities such as Valencia, Barquisimeto and Ciudad Guayana.
Back on Brazil, no major measures were passed in September and October, as Congress was still engaging in debate on how effective the hunger combat program was. The main problem was that distributing money and assistance for over 80 million people would prove to be a major task, especially in a country with already high inflation.
Many liberal economists and magazines, such as Veja, blamed three "problems" for Brazilian inflation: The massive construction boom provoked by the Universal Care Law, as public kindergartens, laundromats and restaurants was happening throrough the country; the land reform program, which, according to Veja, "reduce capital flows into Brazil" and the hunger programs instituted by Mercadante that were, in the opinion of Roberto Campos - a Conservative economist - "unsustainable and unreasonable". Despite the massive right-wing opposition to these projects, Mercadante didn't budge and claimed that all three of the projects were necessary for the development of Brazil.

 

[Taunay]

Chapter 18

On November 1, 1991, in an effort to speed up the construction boom provoked by the Universal Care Law, Mercadante would create a state-owned company - CABANA (Hut in English) (Companhia Brasileira de Construções Nacionais) - whose function would be to build the facilities required by the UCL, with a focus on smaller cities and regions that normal construction companies would find unattractive and not "profitable" enough. While many on the Right (Including Fernando Collor) protested the creation of yet another state-owned company, it was approved by Congress and CABANA would start functioning on the 1st of July of 1992.
Sticking to massive projects, one of the main ones, the Railway Development Plan, was finished by December of 1991. It was inaugurated to national celebrations, with many railways linking cities and regions in order to help in the transport of products (By 2005 this would be expanded to include people and passenger cars would be built). The main railways of the project (Though definitely not the only ones) were:
• Macapá - Cayenne: Linking Portuguese Guiana (Amapá) with the French one, this would be a railway used to transport Amapaense products into the Guyanan markets of Suriname, French Guyana and Guyana.
• Petrolina - Recife: Linking the extreme west of the state of Pernambuco with the capital of Recife. It allowed for the surrounding regions to export their products to foreign markets.
• Teresina - Bom Jesus do Norte: Linking the capital of Piauí with the capital of Bahia. From there, part of the produce was exported, but this railway also extended into Vitória, and finally ended in Bom Jesus do Norte, the border between Espírito Santo and Rio de Janeiro, the latter of which was the ultimate destination
• Porto Velho - Três Lagoas: Linking the capital of the Amazon state of Rondônia, it passed through Mato Grosso before reaching Três Lagoas, in the border between Mato Grosso do Sul and São Paulo

Map of the 4 "Innovative" railways. In total 15 were built, especially in the Center-West and some other regions

The Railway Development Plan was a success. It completely changed the settlement of Brazil, as cities received an influx of workers hired by the program. In some regions, the population doubled due to the project. The Center-West, Rondônia, Espírito Santo, Tocantins and some regions of Minas Gerais experienced massive population growth due to migrations caused by the project. The problem was: What would be of those workers now that it had ended?

On December 26, 1991, the USSR was dissolved, bringing an end to the Cold War. [1]

[1] Just as IOTL

 

[Taunay]

Chapter 19

On January 3, 1992, the New Year started with a bang in Brazil.
The Estado de São Paulo newspaper, that had once revealed the Venezuelan Scheme, now reported on another similar one. Dubbed the "Hidden Scheme", it was found that many of the people involved with the previous scheme continued it, and sales of Brazilian weapons to Venezuela were still happening. This resulted in a government crisis, as Mercadante immediately summoned the Ministry of Defense to explain the situation. By the end of the day, around 30 people in the Ministry who were involved in the scheme were fired and barred from ever holding a government job.
A commission established by the Government, however, would find that the total money the "Underground Scheme" made by selling Brazilian weapons was around 100 million dollars.

The biggest impact from this, however, would come on the fateful day of February 4, 1992.
On the early twilight hours of that day, Hugo Chávez, at that time a powerful political leader within the Venezuelan military, carried out a coup d'état on the Venezuelan Government, toppling it. Some 9 army units under Chávez's leadership stormed Caracas and took control of many strategic points of the city. This resulted in a day of constant fighting between the "Bolivarians" (Named after Hugo's ideology) and the Venezuelan Government. By the end of February 5, however, the siege was complete when Pérez, returning from an international trip at the Maiquetía Airport, was captured, "tried" and executed.

"How did 9 army units under one ideologue manage to wrestle control of a major South American country? This was due to the bigger army units and an effective policy of communication. At first, it seemed unclear what was really going on in the capital city. Not only that, Chávez, with the assistance of one army unit, took control of the Maiquetía Airport, using Brazilian weapons that had been recently sold as a threat (Brazilian tanks and ammunition were of a much bigger quality than Venezuelan ones, making the "legitimate" government forces weaker in firepower even whilst outnumbering their opponents).
After taking control of the area, Chávez arrested all journalists present at the scene and commanded that air traffic control allow the President's plane to land at the airport. From there, Pérez was immediately arrested and sent to a "trial" by the Revolutionary Bolivarian Movement-200"

- Hugo Chávez And His World. Written by Fernando Londoño and published in 2009. Bogotá

Infobox on the coup

On the trial, that took place on the same day and was referred to in future Venezuelan history books as 'Pérez v. The Venezuelan People', the deposed president was found guilty of "committing crimes against the people of Venezuela, by adopting an economic model that led to the misery and death of thousands of his fellow countrymen". He was sentenced to death by firing squad, which took place one day later, on November 6.
The Government of the United States cut all foreign aid to Venezuela following the coup and pressed for a motion in the United Nations that called for the "condemnation of the putschists led by Hugo Chávez for usurping power from a legitimate government and executing a head of state". The motion passed, but US's insistence that sanctions be placed on Venezuela were not met, due to some member's concerns that it could affect their oil supply.
George H. W. Bush, then President of the United States, considered sending troops to the South American country in a "pacifying mission", but this was rejected by his advisors, who were already noticing the growth of both Perot and Clinton in election polls and reasoned that another foreign adventure this early would only strengthen Bush's opponents, specially Perot, who took on an isolationist rhetoric during his campaign.

George H. W. Bush

By November 7, 1992, the remaining rebellions against the Bolivarians were crushed as most major military leaders changed their allegiances in exchange for material and economic rewards.
That day, Hugo Chávez was inaugurated as President of the Republic of Venezuela. The constitution, adopted in 1961, was put on hold as a referendum on a new one was being planned. [1]



[1] I have to warn my readers, if you thought Chávez was too crazy IOTL, get ready, as this one took power at a younger and more radical phase of his life